April 9, 2026

Alabama Senate Passes Overtime Tax Deduction and Two-Month Grocery Tax Holiday

By Rick McCann
Blue RAM Media/Gulf Coast News

April 9, 2026

MONTGOMERY Ala. Alabamians may soon get a reprieve on some taxes and two months of grocery tax holiday after the bill passed the Senate on Wednesday.

Legislation establishing an up to $1,000 state tax deduction for overtime compensation was approved during the session.

The bill by State Rep. James Lomax (R-Huntsville) would establish an Alabama individual income tax deduction for qualified overtime compensation not to exceed $1,000 per taxpayer. The bill is temporary and expires at the end of 2028.

The bill also temporarily removes the remaining 2% of the state’s sales tax on groceries starting on May 1 and ending on June 30.

Some have asked that taxes be completely removed from groceries as it has in other states.

An uncapped overtime tax cut sponsored by House Minority Leader (D-Huntsville) was passed into law in the 2023 session but expired in June 2025.

“This is the overtime bill that we have dealt with before, but it’s certainly much more contained as far as the cost to the ETF,” State Sen. Arthur Orr (R-Decatur) said on the Senate floor on Wednesday. “It also contains a provision for a two-month waiver of the grocery tax, the 2% on food during the months of May and June.”

The bill already passed the House in March. It now heads to Gov. Kay Ivey for her consideration.